Under Michigan Act 299, what is the minimum insurance coverage required for general liability for a residential builder?
Correct Answer
A) $300,000 per occurrence
Michigan Act 299 requires residential builders to maintain general liability insurance of at least $300,000 per occurrence.
Why This Is the Correct Answer
Michigan Act 299 (the Occupational Code) mandates that licensed residential builders maintain general liability insurance of at least $300,000 per occurrence. This minimum threshold was set to ensure that homeowners have recourse if a contractor's work causes property damage or bodily injury during or after construction.
Why the Other Options Are Wrong
Option B: $100,000 per occurrence
$100,000 per occurrence is below the statutory minimum. While some older or informal contractor arrangements may carry this level, Act 299 requires at least $300,000. Selecting $100,000 reflects underestimating the required coverage floor.
Option C: $500,000 per occurrence
$500,000 per occurrence exceeds the Act 299 minimum. Many contractors carry this level voluntarily or at the request of project owners, but it is not the statutory minimum required for licensure.
Option D: $1,000,000 per occurrence
$1,000,000 per occurrence is a common commercial liability threshold and is often required by general contractors on larger projects, but it is not the minimum required by Act 299 for residential builders.
Memory Technique
Remember '3 for Act 299': $300,000 minimum for residential builders under Act 299. Both the '3' in $300,000 and the first digit of '299' are the same — use that visual link to anchor the association.
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